What is Land Use Restriction Agreement or LURA in real estate?

In real estate, the Land Use Restriction Agreement (LURA) is a key document for the Low-Income Housing Tax Credit (LIHTC) program.

The LURA helps keep a multifamily property affordable for low-income tenants. It enforces certain rules about how the property can be used. These rules usually last for 30 years.

The project must provide a set number of units to people who earn less than 60% of the area’s median income and LIHTC requires this. The project must follow this agreement during this time.

Property owners and buyers should know about land use restrictions. These rules can affect the property’s future value.

They can also influence how easy it is to sell the property. State housing finance agencies enforce the agreement. Its terms must be followed, even if the property is sold before the compliance period ends.

Investors who want to increase their rental income may not prefer properties with LURAs. This is because these properties typically do not have restrictions.

Extended use enforced by LURAS is important in some states. It helps provide affordable housing long-term. This ensures safe homes for families with limited resources.

Following the LURA can bring financial benefits like claiming LIHTC credits over time for developers or owners. Tax credits are important for funding affordable housing projects.

Tax credits help fund affordable housing projects. For example, an agency might provide $1.4 million of a total $2 million loan from a bank. This shows how they contribute to financing.

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